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. Last Updated: 07/27/2016

Chevron Vows to Fight Kazakh Fine

ALMATY, Kazakhstan -- A Chevron-led oil venture in Kazakhstan denied that it was violating environmental laws and said Thursday that it would fight a $609 million fine imposed on it by the government.

The fine was announced Wednesday by Environment Minister Nurlan Iskakov, who said the group had made slow progress in removing open-air sulfur stocks at the huge Tengiz oil field.

The move worried foreign investors working in Kazakhstan, which is involved in a separate dispute with an Italian-led consortium developing another major oil field, Kashagan, over cost and schedule overruns.

"I am not going to speculate on the Kazakh government position or on their motivations," said Todd Levy, general director of the TengizChevroil joint venture. "With regard to sulfur, we store it completely in line with international standards, completely in alignment with environmental legislation. ... We disagree with the claim. And we are fighting it aggressively."

The oil from Tengiz contains toxic hydrogen sulfide, which is processed into huge piles of inert yellow sulfur and stored near the oil wells before the crude is transported by pipeline. The venture sells some of the byproduct. Although the sulfur market is limited, Levy said that last year, for the first time, the company sold more sulfur than it had made.

"We are also working very closely with the Kazakh government in evaluating ... the best way to handle and store sulfur," he said.

Maria Karazhigitova, a TengizChevroil spokeswoman, said earlier that the company would challenge the claim in court, adding that a case related to the fine had been filed in a regional court in July.

Levy declined to say how long he expected the court case to last.

The TengizChevroil venture also includes ExxonMobil, LUKoil, and Kazakh state energy firm KazMunaiGaz.